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Treasurer Fitch: State Continues to Benefit from Lawmaker’s Fiscal Discipline

Posted On:
1/15/2015

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Mississippi
State Treasurer Lynn Fitch spoke today at the Legislative Economic Briefing, updating
legislators on the state’s current bond indebtedness, the Treasury’s debt
service request for fiscal year 2016, the most recent rating agency
discussions, and the debt affordability plan.

Treasurer
Fitch told lawmakers that currently the state has 100% general obligation bonds
outstanding of $3.9 Billion as of December 31, 2014. Factoring in the current
bond sale that is set to close by mid-February 2015, the estimated fiscal year-end
balance is projected to be $4.17 Billion, less than a 1% increase over June 30
of last year.

“Conservative
legislative authority and disciplined spending on the part of the Legislature,
along with conservative issuance on the part of the State Bond Commission over
the past several years has created a positive trend, improving our overall
position,” noted Treasurer Fitch.

Treasurer
Fitch explained that if the state can continue to use fiscal restraint when
authorizing new bonds, the state can see a continued decline over time in
existing debt service payments. Fitch also stressed the importance of using recurring
revenues to pay for recurring expenses like debt service, which is currently
7.01% of budget outlays.

This morning,
Treasurer Fitch noted within the past year, the Treasury has continued to
communicate with all three rating agencies. While the state has a good rating,
there is room for improvement.

“Thanks to the
Legislature’s actions in the 2014 session, we have reduced our dependence on
the use of one-time funds,” stated Treasurer Fitch. “Our ultimate goal is to move
from an AA-rated state to an AAA state.”

Treasurer Fitch
reported other steps in the right direction. She reaffirmed her commitment to
changing Mississippi’s financial culture through the Treasurer’s Education
About Money (TEAM) initiative, one of her highest priorities since taking
office. In 2014, the Treasury released
the state’s first Debt Affordability Study, which received praise from rating
agencies and the chairman of the Municipal Securities Rulemaking board. “I
believe in being transparent with Mississippi taxpayers,” stated Treasurer
Fitch. “This study provides the public with a resource to truly understand the
state’s debt. Not only are we able to give decision makers and our citizens a clearer
picture of the state’s debt, the study is also viewed favorably by rating
agencies.”

Treasurer
Fitch closed her briefing with the hope that policymakers use the Debt
Affordability Plan to inform their decisions regarding the authorization of the
new debt. The updated plan is expected to be released in March 2015.